Spanish banking group Banco Sabadell is reportedly looking to slash more jobs and form alliances with European lenders for product distribution.
The news comes after its merger talks with rival lender BBVA ended last week, due to a disagreement over price, Reuters reported citing four sources familiar with the matter.
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Sabadell investors are concerned about the lender’s ability to handle the rise in bad loans alone, in the wake of the Covid-19 crisis.
While it is considering cost saving measures, the bank is also looking to sell its British retail banking unit TSB, the report added.
The cost-cutting measures include striking deals with other European banks and additional job cuts of up to 2,000 people in Spain next year.
These redundancies add to the previously announced 1,800 job cuts in Spain.
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By GlobalDataA banking source said: “Sabadell has been caught in some kind of nowhereland. It is too small to play a role with the big Spanish players but bigger than most of the regional lenders.”
The source added that non-performing loans in the corporate sector could start increasing once Covid-related support measures are lifted.
The Sabadell-BBVA all-share merger, which was first announced last month, fell apart as there was disagreement over the price BBVA would pay for its smaller rival.
Initially, BBVA made an offer of nearly €2.5bn ($3bn), but Sabadell demanded more after its share value had increased recently.
The new BBVA-Sabadell entity could have nearly €600bn ($710bn) in assets and a market value of €26.7bn in Spain.
Internationally, the combined company could have €860bn in total assets.
A successful synergy could result in the combined group having a total of 4,225 offices in Spain and 45,866 employees.
Sabadell anticipates its British subsidiary TSB to break even next year, according to Reuters.
A spokesman for TSB said: “We have seen good momentum in underlying business growth and have accelerated the delivery of our strategy, including taking full control of our IT, delivering a right-sized modern branch network and reducing overall operating costs.”
